XLK Weekly (rocky top, you're still home sweet home to me)
From Covid low (red A) on 3/2020 to all time high on 12/27/2021 (green A), we retraced not quite .618 to green B at .588. Notice that XLK topped in December 2021 and led the general market (SPY) decline that happened in January 2022.
We have since set a new high at green C at 181.46. This is 6.9 pct higher than prior high of 12/2021, but close enough to be concerned about a double top starting to form. We are also seeing the beginning formation of a broadening wedge.
Most recent high of 181.46 failed to hold support at the 1/1 square Gann ray, and looks to be seeking prior pivots (circles 163.65, -9.8% off high, and 151.86, -16.3% off high). A 50% retrace off the high would put us at green D and at a low volume node around 145 - 147. Should we reach this level, sure enough we have broken both pivot supports and we are well on our way to a true double top base forming around the POC (yellow line). We don’t want to go there.
Personally I’m expecting an intermediate bottom to form at the second pivot circle or at the green D around late December to early January, and then will take another look from there.
Note that on the monthly chart we crossed the 12 month SMA in March, and it is angling upward, so we cannot say that “bear” word just yet. Nevertheless, I expect an eventual test of the 12 month line (which is very near that green D on this chart).
We have since set a new high at green C at 181.46. This is 6.9 pct higher than prior high of 12/2021, but close enough to be concerned about a double top starting to form. We are also seeing the beginning formation of a broadening wedge.
Most recent high of 181.46 failed to hold support at the 1/1 square Gann ray, and looks to be seeking prior pivots (circles 163.65, -9.8% off high, and 151.86, -16.3% off high). A 50% retrace off the high would put us at green D and at a low volume node around 145 - 147. Should we reach this level, sure enough we have broken both pivot supports and we are well on our way to a true double top base forming around the POC (yellow line). We don’t want to go there.
Personally I’m expecting an intermediate bottom to form at the second pivot circle or at the green D around late December to early January, and then will take another look from there.
Note that on the monthly chart we crossed the 12 month SMA in March, and it is angling upward, so we cannot say that “bear” word just yet. Nevertheless, I expect an eventual test of the 12 month line (which is very near that green D on this chart).
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